Building Sustainability — Lessons from Farming Yield and Cattle
The most innovative technology can never fully express itself if sustainability is not part of the design.
Today’s article is a special feature from our co-founder Farmer John. When he’s not yield farming in crypto, he’s farming cattle in ‘the real world’. At TradFi to DeFi, we’re focused on the cutting edge but that doesn’t mean we don’t keep one foot tethered firmly in reality. And that’s why I’m so grateful to John and his efforts to keep us focused on the things that truly matter. Enjoy!
— Tyler, TradFi to DeFi Co-Founder
This summer has been particularly brutal with the lack of rain and above normal temperature. As a rancher, that presents a number of challenges that will determine the profitability of our operation. These conditions affect the two main inputs for cattle to thrive, water and grass. Without the element of sustainability built into my system it would be severely impacted.
Sustainability is crucial to the design of any system. It must be part of the design process whether it be a pasture management system or a Bitcoin mining operation. The most innovative technology can never fully express itself if sustainability is not part of the design.
During this current bear market we have seen Bitcoin and Ethereum drop over 60% from their most recent all time highs. We have seen major implosions that have rocked the crypto market from the collapse of UST to the obliteration of hedge funds like 3AC. We can blame this on the over use of leverage, poor project design or just plain greed. Regardless of which project or fund manager is most to blame, what is quite apparent from this fallout is that most were not built to sustain the extremes of the crypto market. Considering that the history of crypto has been largely about the extremes of the market, this is surprising.
In my own industry of raising beef cattle, it is built around a very fragile system of industrial production. It is a very centralized system that keeps the rancher reliant upon a handful of companies who control all the input. The agribusiness industry is really an oligopoly. There are only a handful of players that control all the inputs — seeds, fertilizer, pesticides, herbicides, heavy equipment. On the output side there are only a handful of processors that buy cattle. The system is so fragile the government must provide huge subsidies to farmers to keep them profitable. That’s right, by design you are outsourcing your sustainability to the government.
Likewise our monetary system is quite fragile and requires government intervention to keep things from completely imploding. Most of the adherents to cryptocurrency see this and are wanting to create a different system or at the very least protect themselves from the dangers of the current system. Many are wary of government involvement through regulation. But the key to long term sustainability is in the design. Given the current market conditions and the unwinding of the damage done over the past 6 months, it is imperative to rethink system designs with an eye towards sustainability not just profitability.
In my cattle operation I have opted out of the industrial grain fed model because it is not sustainable. In the industrial model all inputs are all controlled my multinationals and are commodity priced. As we see in the extreme conditions of the global economy today, this fragility can destroy profitability. On the output side you are selling into a commodity market which you have little control on price. I have opted to sell directly to consumers a grass finished product. No need to worry about grain prices since grass is the main input. By proper grazing management, the resources I have on my land are conserved as opposed to abusing it and pouring fertilizer and herbicides on it to make up for the lack of management.
As we look toward the future, what designs will need to be deployed in the building of protocols that will stand the test of time and not just the next bull market? Are you just incrementally improving a poor design or have you started from a place of sustainability? The mistakes people have made…improper leverage, fragile design are things that have plagued business systems forever. Who is stepping out of that paradigm and doing something different and sustainable? Who is building for crypto’s true mass adoption moment?
When I first decided to give cattle ranching a go, lots of local ranchers warned me that it was a great way to lose money. My next question was “how do you do it?” They said “like everyone else does: they raise cattle and sell them at auction”.
I was determined to find a different way.
You see, copying the same system designs that have failed for other people was not a road I wanted to go down. This should be the same mentality as someone designing a new protocol. Are you just copying another approach, just on a different chain? Are you improving on a failed design? Or have you thought deeper and kept your eye on creating a sustainable design?
We can do better. The future depends on it.
TradFi to DeFi is a networking hub, project incubator, talent connector, mentorship provider, and opportunity maximizer for the DeFi enthusiast, whether new or experienced. Every Friday at 3 pm EDT, we host an open mic round table, where we discuss DeFi (decentralized finance), how it intersects with traditional finance, and where we see this whole thing going. This article briefly summarizes the topics of our latest discussion. Want to join us? Check out the links below!
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